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Childcare boost for working families - what you need to know about the new vouchers plan

Parents earning less than £150,000 will be given up to £1,200 per child per year

More than two million families stand to benefit from the tax-free childcare plans, which have been announced ahead of Wednesday’s Budget.

The government is promising to help more with childcare costs, but how will it work and who will benefit?

What is the promised proposal?

From Autumn 2015, parents will be able to use an online voucher system, which will mean up to a fifth of childcare costs are paid for by the state.The value per year per child will be £1,200. Initially parents of children under the age of five will benefit. This will rise over time to cover households with children under the age of 12.

Who is eligible?

Households where both parents work will qualify. So those where one parent stays at home to concentrate on childcare will not receive the payments. Single parents must also be working to get the help.

How many hours do people have to work?

Parents who claim benefits will have to work at least 16 hours a week.

Does it matter how much parents earn?

Yes - those on incomes of up to £150,000 a year will qualify. Households with two working parents could earn up to £300,000 a year and still join the voucher system.

What about low-income households?

Those on tax credits will not be eligible. Instead, under an existing arrangement, if you receive tax credits and you and your partner both work 16 hours or more a week you can get up to 70% of childcare costs paid by government.

How will the vouchers work?

Parents will be able to open an online account with a voucher provider and have their payments topped up by the government.

How much will it cost?

Ministers say this new government voucher plan will cost approximately £1.4bn. Half of this cost is coming from the closure of the old childcare voucher scheme, and the rest from money switched within the government's budget.

Here at MFM we would love to hear your viewpoints on these childcare changes. Let us know your thoughts below...